Saudi Arabia’s market performance has remained resilient, thanks to the best growth rate among G20 countries, ongoing attempts to diversify the economy, and a healthy inflow of foreign direct investment.
“Tadawul is by far the largest stock exchange in the Middle East, and it is seeking to become a regional center with cross-listings of companies from other countries in the Gulf,” said Waleed Rasromani, corporate mergers and acquisitions partner of Dubai and Riyadh at Linklaters, a UK-based multinational law firm.
Intense merger and acquisition activity, combined with strong growth in initial public offerings, has led to the evolution of the Kingdom’s market, which is likely to continue beyond 2023.
The Kingdom’s oil-led growth, non-oil diversification plan, and political structures laid the groundwork for its outstanding market performance.
Strong liquidity, local investor enthusiasm for Saudi stocks, and the pursuit of Vision 2030 goals have all aided the market’s rise.
According to a World Bank report released in November, growth in the oil sector is propelling the Kingdom’s economy forward. As a result, the economy is predicted to grow at an 8.3 percent annual rate in 2022.
Despite economic difficulties, the International Monetary Fund predicted that Saudi Arabia would maintain its position as the G20’s fastest-growing economy.
In terms of legislative activities, the Capital Market Authority is aiming to make the financial market more appealing and transparent, as well as to raise investor awareness.
CMA’s goal is to increase institutional investor turnover to 41% of overall market turnover by the fiscal year 2023.
Another aspect that permits and supports Saudi market growth is the Kingdom’s Financial Sector Development Program.
With the exception of the Saudi Arabian Oil Co. IPO, it projected to raise the stock market’s value as a proportion of GDP to 88 percent by 2030, up from 66.5 percent in 2019. The closing share price of Saudi Aramco on December 29 was SR32.10.
The Saudi government is also encouraging the planned privatisation of state-owned organisations through initial public offerings (IPOs) on the Saudi stock exchange.
Furthermore, due to disclosure and corporate governance standards, Saudi corporations prefer to launch IPOs on local stock exchanges rather than on more developed stock exchanges.